Another way to sell
In today’s tough market, sellers can still turn to an old-fashioned option: Seller-held financing.
If you own your property outright – with no mortgage at all – you can sell it and hold the mortgage. The buyer then pays you every month, not a bank or a mortgage company.
In many ways it works just like a regular sale. You negotiate the price, settlement date and all the other terms with the buyer. But you also stipulate that you will hold the note. The buyer will have to agree to this, and they’ll also have to agree to your terms. These terms could include down payment amount, what interest rate you’ll charge, and how long the mortgage will last.
What’s in it for the buyer? Well, if you drop the interest rate by even half a point from what the bank charges, your buyer will get a great deal.
And what’s in it for you, the seller? You’ll get a steady income stream every month… and you might make a lot more than you would if you had the money in savings. Also, there may be some tax advantages if you get monthly payments rather than a lump sum at the settlement table – ask your accountant if that’s true for you.
It’s really simple, and a lot more people do it than you might think. Remember, though, you’re taking on the role of the bank. This means you’ll have to accept the payments, keep detailed records, and at the end of the year, you’ll have to send the borrowers their mortgage interest statement for tax purposes. Sound like too much? If so, you can hire an accounting firm to handle all that.
Interested? Talk to your REALTOR® about finding a qualified title attorney who can not only do your settlement…but who can draw up the mortgage papers as well.
PS – What happens if the buyer defaults? You get the place back.
Keep listening to Real Estate Today for more advice on how to attract buyers in a tough market.
[...] Another way to sellBy Gil Gross – Real Estate Today Radio · March 20, 2009 In today’s tough market, sellers can still turn to an old-fashioned option: Seller-held financing.If you own your property outright – with no mortgage at all – you can sell it and hold the mortgage. The buyer then pays you every month, not a bank or a mortgage company.In many ways it works just like a regular sale. You negotiate the price, settlement date and all the other terms with the buyer. But you also stipulate that you will hold the note. The buyer will have to agree to this, and they’ll also have to agree to your terms. These terms could include down payment amount, what interest rate you’ll charge, and how long the mortgage will last.What’s in it for the buyer? Well, if you drop the interest rate by even half a point from what the bank charges, your buyer will get a great deal.And what’s in it for you, the seller? You’ll get a steady income stream every month… and you might make a lot more than you would if you had the money in savings. Also, there may be some tax advantages if you get monthly payments rather than a lump sum at the settlement table – ask your accountant if that’s true for you.It’s really simple, and a lot more people do it than you might think. Remember, though, you’re taking on the role of the bank. This means you’ll have to accept the payments, keep detailed records, and at the end of the year, you’ll have to send the borrowers their mortgage interest statement for tax purposes. Sound like too much? If so, you can hire an accounting firm to handle all that.Interested? Talk to your REALTOR® about finding a qualified title attorney who can not only do your settlement…but who can draw up the mortgage papers as well. PS – What happens if the buyer defaults? You get the place back. Posted: Sunday, March 29, 2009 2:35 PM by Edwin Ramos Filed under: Real Estate [...]